THE residential property sector in Hongkong will be quiet until the end of the first quarter, as investors are holding out for the conclusion of Sino-British talks on Governor Chris Patten's reform plans, according to Mr David Faulkner, an associate at Brooke Hillier Parker (BHP). Mr Faulkner said that a survey by BHP indicated that despite falling prices investors are still discouraged by the 70 per cent mortgage ceiling. The survey reveals the most significant price drop for the beginning of the first quarter was with Kowloon Class C flats. Sales in December were at $3,295 per square foot (psf) and fell 3.5 per cent to $3,178 psf in January. Prices of Class B and C flats in Hongkong dropped by 0.6 per cent in January, whereas large-size flat prices increased by 2.5 per cent. For the territory as a whole, the beginning of the first quarter saw a 0.2 per cent increase in Class A and B flat prices whereas larger flat prices increased 0.5 per cent. This is in contrast to the beginning of last year's first quarter activity when overall flat prices were on the rise. January of last year saw Class A and B flat prices rise 2.6 per cent from December prices, along with Class C and D increases of three per cent. Flat prices in Pokfulam shot-up at the beginning of the first quarter, according to the survey. It was selling for $3,248 psf in December of last year and jumped to $3,359 psf in January sales, a rise of 3.4 per cent. Mr Faulkner explained the price jump as misleading with regard to Pokfulam's overall performance. Consistent with the rest of the market, Pokfulam prices have fallen 4.2 per cent since July. According to Mr Faulkner, Pokfulam, along with the rest of the market, will be quiet until the end of the first quarter. As for large major residential estates, Village Garden alone showed an increase in price. Last year's third quarter prices were at $4,361 psf and jumped to $4,580 psf in the fourth quarter, showing a five per cent increase. Mr Faulkner explained that because Village Garden is at the upper-end of the market, buyers are less affected by the mortgage ceiling and are taking advantage of the ''buyer's market''. Buyers at the middle to lower-end of the market, however, are still inhibited by the mortgage ceiling, which explains why Class A and B prices are falling more than Class C and D. Despite the jump in Village Garden's price, the survey reveals that annual growth since the fourth quarter 1991, was at only 20 per cent. City Garden had the largest annual growth for 1992 at almost 30 per cent. However, Village Garden's performance in the fourth quarter was consistent with the market as prices fell 3.2 per cent. At the end of the third quarter it was selling for $4,013 psf and dropped to $3,884 psf in the fourth quarter. The report revealed that Laguna City fared worst. With a 24.2 per cent annual growth for 1991, Laguna City's price dropped from $3,755 psf in the third quarter to $3,548 psf by the end of the fourth, showing close to a six per cent plummet. Mr Faulkner predicted more movement from the large residential estate market than from the territory's flat market - again due to mortgage rates - but insisted that all activity would remain minimal.